KUALA LUMPUR: The settlement of the Malayan Railway land issue in Singapore has opened up vast property development opportunities in both countries, said a global real estate company.
In a research report dated last Wednesday, London-based DTZ said that with the 20-year dispute resolved, Malaysia and Singapore can now co-build a growth story along the lines of the Hong Kong-Shenzhen model.
And one of the first beneficiaries, said its authors, is the Iskandar Malaysia development region in south Johor.
According to its South-east Asia head of research Chua Chor Hoon and consulting and research executive director Brian Koh, warmer bilateral ties have brought an increase in Singapore investments in Iskandar, including a university by Raffles Education Group.
Earlier reports indicate that Singapore companies had committed investments of RM740 million (S$312 million) in the first half of last year.
'Iskandar will support Singapore as its hinterland providing lower cost land, cheaper labour supply and overall lower operating costs, and enjoy international linkages via Singapore,' the DTZ report said.
The Iskandar region is part of a broader aim by Malaysia to boost its economy, and aims to leverage its proximity to Singapore.
In its report, the DTZ said it expected people from other parts of Malaysia to move to Iskandar to take up jobs in Singapore, although it was not yet clear if the area can attract Malaysians living and working in Singapore to move back.
It also expected Singaporean demand for homes in Iskandar to rise, citing a higher level of confidence, though it noted that perception of personal safety remains an important factor. Low-end commercial activities like back-office processes could also shift to Iskandar, increasing demand for office space.
But the report added: 'However, unlike Hong Kong and Shenzhen, which are both under one country, a lot more cooperation and government involvement is needed between Singapore and Malaysia to overcome two distinct economic and legal systems, and build trust and cooperation, whilst pursuing their respective national and economic objectives.'
Some property analysts, however, were less optimistic. They noted that it would take more than cheaper land to draw Singapore investors to Iskandar. Factors such as security, availability of labour and Malaysia's competitiveness, they stressed, were key considerations.
'A lot depends on the type of property and how it is marketed in Singapore. It also comes down to where the property is located and how safe and accessible it is,' said Mr Nicholas Mak, executive director of research and consultancy at SLP International Property Consultants.
OrangeTee's head of research and consultancy Tan Kok Keong said the Singapore Government's involvement in the project could help the Iskandar project.
'If Temasek Holdings breaks ground with its proposed wellness township project, it will give Singaporeans more confidence to break into market,' he said.
The Malayan Railway land settlement was agreed upon by Singapore Prime Minister Lee Hsien Loong and his Malaysian counterpart Najib Razak last May. Both sides agreed to move the existing railway station in Tanjong Pagar to Woodlands by July this year.
The railway land will be returned to Singapore in exchange for three parcels of land for joint development. The two nations also agreed to build a rapid transit system between Johor Baru and Singapore by 2018, and jointly build an iconic wellness township project in Iskandar.
The DTZ report described this land exchange as a win-win situation.
Malaysia, it noted, gets prime land to develop, while Singapore could now make better use of the Tanjong Pagar site by amalgamating it with adjoining areas, augmenting its long-term plan to grow the southern part of the Republic.
But it observed that the land on which the train tracks are built is too linear and shallow for meaningful development, unless it is amalgamated with adjacent land.
'The settlement of the railway agreement will open up property development opportunities not envisaged before in both countries,' the report said.